Welcome to The Third Industrial Revolution,Nike Air VaporMax pas cher which according to the Economist of 21 April 2012, suggests that the rapidly evolving digital manufacturing phenomenon will ‘change not just business but much else besides.’The first industrial revolution commenced in the 18th century with the mechanisation of the textile industry, the second early in the 20th century when Henry Ford’s moving assembly line initiated the age of mass production. The third industrial revolution, argues the Economist, will be the outcome of manufacturing going digital and derives from the convergence of computer technology, the development of new materials, dextrous robots, new processes like three dimensional printing, and access to a range of web- based services.
the rapidly evolving digital manufacturing phenomenon will ‘change not just business but much else besides’
The social, political, economic, strategic and structural implications arising out of this fundamental change to the way goods are produced have the potential to radically alter the world we live in and impact on the management accounting profession as we know it. By introducing some initial thoughts in this short article I hope to stimulate a debate that will culminate in the formation of the technical tools necessary to make our profession as valuable to the third industrial revolution as it was to the first and second.
Some imagination is required for developing a vision of the product producing facilities that will operate in this third industrial revolution. Robot driven customised mass production facilities characterised by a shop floor devoid of any human intervention will churn out product for a global market. Maintenance in these smart factories will be performed away from the production area as smart robots programmed to check-in for their periodic health assessments take themselves off the floor and are soundlessly replaced by others just serviced by the engineering function. Production lines will be truly flexible with instantaneous changes to tooling and processes made by technicians driving software applications controlling the robotic environments. These smart factories will have the capability to produce product either in large quantities or as individual items.
Competing with these totally automated production environments will be a mass of micro manufacturing units supplying a diverse range of products direct to the consumer and using the internet as its distribution channel. It will be a return to cottage industries where home- based entrepreneurs produce proprietary customised products using clever software driving three dimensional printers. These micro environments, using an additive manufacturing process, will be capable of producing a diverse range of product from homewares to electronic equipment. Never actually meeting their customers in the flesh, transaction between manufacturers and consumers will be driven through distribution channels developed by the internet. Management accountants will need to confront two diametrically contrasting environments, one devoid of any traditional direct labour and one characterised by manually driven manufacturing processes, albeit utilising 21st century tools.
At the outset, both environments will face the one common cost management issue of huge initial expenditures applied towards developing the initial software and engineering capability. The assessment of project viability and its ultimate cash contribution will need to incorporate a process allowing for development costs to be capitalised and amortised over the estimated life of the product. This fact, together with the potential for short product lifecycles, will mandate the application of a lifecycle approach for cost allocation and control.http://www.airmaxfrance2015.com/
Ignoring the financial accounting implications for accounting standards and disclosure, the widespread application of a lifecycle costing approach could create a potential source of competitive advantage between large robotically driven smart factories and small cottage-based industries. The combined cost of initial development together with that of a large scale robotic production facility could make certain projects non- viable for the smart factory but perfectly suited to a low cost cottage-based environment. Analysing this critical strategic question during a project’s early development phase would be the management accountant’s role.
Smart factories driven by robots will contain a zero product direct labour component, however, the facility will be managed using knowledge workers to develop, control and maintain the facility. These workers become a different category of direct labour, and cost systems will need to acknowledge this and accommodate the new dimension to a cost element recognised back in the days of the first industrial revolution. Activity based approaches will also come into their own as management seeks to understand and control the cost of the support activities driving their sophisticated, complex high cost manufacturing facilities and how these costs relate to its outputs.
Paradoxically, cottage industries characterised by a small number of individuals using sophisticated software applications driving three dimensional printers will need to blend the traditional simple cost model with the complexity of a lifecycle costing approach. This means that in addition to calculating the cost of direct materials – represented by the various resins feeding the printers, direct labour represented by the time behind a screen formatting instructions driving the software applications and, the direct and indirect overheads – a factor will need to be added for the significant initial cost incurred to acquire both intellectual property and production capability.
The backbone of both organisational types will be the systems used for data capture, storage, retrieval, sorting and communication .This process will have two distinctive capabilities, the management information system and, spreading over it, the data mining system. Data mining is evolving into a science with its own body of knowledge driven by complex algorithms that interrogate data bases to draw out the intelligence which management requires for planning, control and both task and strategic-oriented decision making.
And so to the final conclusion for this attempt at forecasting the future.
As a profession we will need to evolve and morph into a hybrid version of what we currently are. Management accounting will need to evolve into a body of knowledge combining accounting, finance, and data management with in-depth understanding of computer capability and risk management. Above all, its practitioners will need to not only accommodate change but to harness this as a competitive weapon both in the application of their own science and in the management of the organisations they service.
